2018
ANNUAL
REPORT
E I L D O N C A P I T A L L I M I T E D
For personal use only CONTENTS
COMPANY PARTICULARS
CHAIRMAN’S REPORT
COMPANY HIGHLIGHTS
THE YEAR IN REVIEW
DIRECTORS’ REPORT
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
STATEMENT OF FINANCIAL POSITION
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
CORPORATE GOVERNANCE STATEMENT
ADDITIONAL INFORMATION
01
02
03
04
08
14
15
16
17
18
35
36
39
46
For personal use only COMPANY PARTICULARS
EILDON CAPITAL LIMITED
ACN 059 092 198
REGISTERED OFFICE
Level 25
360 Collins Street
Melbourne VIC 3000
BOARD OF DIRECTORS
James Davies - Chairman
Mark A Avery
Alexander D H Beard
Michelle E Harpur
COMPANY SECRETARY
John Hunter
MANAGEMENT TEAM
Mark Avery
John Hunter
Alexander Beard
Jufri Abidin
Jonathan Sim
William Chen
BANKERS
Westpac Banking Corporation Limited
Bank of Western Australia Limited
SOLICITORS
Thomson Geer Lawyers
Level 25
1 O’Connell Street
Sydney NSW 2000
AUDITORS
HLB Mann Judd Chartered Accountants
Level 19, 207 Kent Street
Sydney NSW 2000
SHARE REGISTRY
Computershare Investor Services Pty Limited
Level 4, 60 Carrington Street
Sydney NSW 2000
1
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only CHAIRMAN’S REPORT
For the year ended 30 June 2018
Dear Shareholder,
Outlook
I am pleased to introduce these annual accounts and
company report for the year to 30 June 2018.
This is the first full year of operations since listing
on the ASX in February 2017 and the investment
activities undertaken since that time have firmly
established Eildon Capital as a financial partner of
choice in the Australian property sector.
Highlights
Financial highlights since listing to 30 June 2018
include generating a pre-tax return of 14.1%p.a.,
consistent with the objectives outlined in the
prospectus and which translates into a post-tax
return of 9.2%p.a. These returns have been achieved
without Eildon taking any balance sheet debt.
At the time of writing Eildon has undertaken 14
transactions and its capital is fully deployed. Further
investments will be possible as funds are returned as
a result of loan repayments. The composition of the
portfolio of investments is a result of a conservative
view on the property market. Of particular note is
that the current debt investments, representing 87%
by value of the portfolio, have a weighted-average
loan-to-value ratio of 59%, providing a healthy buffer
against any downturn in the property market.
Eildon also had an active year with respect to capital
management. In February 2018 Eildon completed a
further capital raising of $16.6m via a placement and
share purchase plan. During the year it also initiated
a dividend re-investment plan. These funds are being
used for organic growth consistent with the current
strategy.
Total dividends paid since listing are 16.1 cents per
share (including September 2018 quarterly dividend).
The Board continues with its guidance of a targeted
minimum dividend yield of 5% of the $1.06 Offer Price
at the time of listing.
The activities of Eildon are primarily influenced by
two markets: the Australian property market and the
property lending market.
The Board and Management of Eildon hold a
cautious outlook for the Australian property market.
Valuations are high by historic standards in a number
of areas but the company continues to see attractive
opportunities in others. Eildon can invest in a range of
property types (commercial, industrial or residential),
funding instruments (senior debt, subordinated debt
or equity) and geographies. This flexibility allows
Eildon to respond to changes in market conditions
while remaining true to its investment priorities of
capital preservation, attractive returns and the ability
to add value either directly or through partnerships.
The Board and Management consider the property
lending market will continue to provide growth
opportunities for Eildon over the longer-term.
Property lending has traditionally been dominated
by the big banks, however regulatory pressures and
changes to internal credit policies have seen bank
lending for anything other than traditional senior
loans diminish. This has created a gap in the property
financing sector, especially for subordinated debt and
non-developer equity, and we expect this opportunity
to continue to grow over time. Eildon now has a well-
established platform to invest in this growth over the
long-term at attractive returns.
Finally, I would like to thank the Board directors,
leadership team and our manager, Eildon Funds
Management, for their efforts over the course of
the year. And I would also like to thank you, our
shareholders, for your continuing support of Eildon.
James Davies
Chairman
2
EILDON CAPITAL LIMITED | 2018 Annual ReportFor personal use only COMPANY HIGHLIGHTS
For the year ended 30 June 2018
NEW CAPITAL
INVESTMENT PORTFOLIO
Eildon Capital Limited (ASX:EDC)
successfully completed a capital raising
of $16.6m during the year
NET PROFIT
Net profit after tax of $3.0 million
(2017 $3.6m)
EARNINGS PER SHARE
Earnings per share totalled 7.9 cents
(2017 15.9 cents)
DIVIDENDS
Dividends paid to shareholders totalling
7.7 cents per share, including the June
quarterly dividend of 1.925 per share paid
on 24 July 2018
Portfolio of investments now includes senior
loans, mezzanine loans, a joint venture in a
direct property and long-term options to
acquire property for development purposes
PORTFOLIO
The portfolio provides for a combination of
recurrent income and capital appreciation
from direct property investments
AVAILABLE FUNDS
Available funds have been fully committed
to investments, spread across Victoria,
New South Wales and Queensland
DEAL FLOW
Increased deal flow being experienced
as a result of both market conditions and
increased business development focus
3
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only THE YEAR IN REVIEW
For the year ended 30 June 2018
PROPERTY INCOME CONTINUES TO GROW YEAR-ON-YEAR WITH
CURRENT EARNINGS BEING GENERATED PREDOMINATELY FROM
INTEREST INCOME EARNED ON THE LOAN PORTFOLIO.
The following table provides an indication of the growth in operating income for the financial year:
REVENUE
Property
2018
$
5,198,487
Private equity and listed investments
-
Bank interest
TOTAL
192,967
5,391,454
2017
$
3,593,992
2,343,889
117,258
6,055,139
Although earnings during the financial year
was 7.9 cents per share, compared to 15.9
cents per share in 2017, the 2017 results
included the once off sale of Green’s Foods
Holdings Pty Limited and the remaining listed
investment portfolio, which provided an
earnings per share contribution of 10.2 cents
per share to the 2017 profit.
During the year, the Company completed a
capital raising of $16.6 million at $1.05 per
share. The capital raising has allowed the
Company to continue to grow its property
investment portfolio. The proceeds of this
initiative have now been fully deployed/
committed to investments which is
anticipated to deliver increased earnings.
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EILDON CAPITAL LIMITED | 2018 Annual ReportFor personal use only
INVESTMENT PORTFOLIO
At the end of the financial year Eildon Capital
held an investment portfolio valued at $38.8
million. During the year the portfolio generated
income of $5.3 million, delivered mainly through
interest earned on loan facilities.
The investment portfolio is weighted toward
debt investments (11 in total) to provide capital
protection should property markets weaken and
values stagnate or decrease. Some strategic
equity investments (4 in total) are held where
there is potential to see meaningful
capital growth through either asset repositioning,
market re-rating or planning outcomes.
The portfolio also has strong geographic
distribution with investments in Queensland,
Victoria and New South Wales.
EILDON CAPITAL
INVESTMENT BY GEOGRAPHY
EDC Portfolio by Type - Peak Exposure
For the year ended 30 June 2018
Equity
Investment
1 1%
41%
Senior
Debt
48%
Mezzanine
Debt
EDC Portfolio by Geography - Peak Exposure
Sydney
0%
9%
Brisbane
60%
31%
Melbourne
Gold Coast
Woolloongabba – Equity – Core-Plus Investment
Biggera Waters – Senior Debt – Residential Development
Carrara – Senior Debt – Residential Development
Bulimba – Mezzanine – Residential Development
BRISBANE
Kingsgrove – Equity (Option) – Rezoning Opportunity
Turrella – Equity (Option) – Rezoning Opportunity
SYDNEY
MELBOURNE
Hawthorn – Mezzanine – Residential Development
East Bentleigh – Mezzanine – Residential Development
Beaumaris – Mezzanine – Residential Development
South Kingsville – Senior Debt – Residential Development
Sandringham – Senior Debt – Residential Development
Martha Cove – Mezzanine – Residential Development
McCrae – Mezzanine – Residential Development
Burnley – Equity – Planning Opportunity
Coburg – Senior Debt – Residential Development
5
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only THE YEAR IN REVIEW
For the year ended 30 June 2018
SHAREHOLDER RETURNS
Net tangible assets as at 30 June 2018 were $1.04 per share and during the year shareholders have been paid
fully franked dividends of 7.7 cents per share. Since listing on the ASX in February 2017 at $1.06, the Company
has generated total shareholder returns of 9.2%p.a. as at 30 June 2018 not accounting for the benefit of franking
credits paid to investors in that period.
NTA & ACCUMULATED DIVIDENDS SINCE ASX LISTING
6
EILDON CAPITAL LIMITED | 2018 Annual ReportFor personal use only OUTLOOK
CAPITAL MANAGEMENT
The directors remain focused on generating recurrent
income streams and capital appreciation through
investment in the property sector. This will be achieved
through growing the investment book through a ‘best
fit’ combination of:
– Loans
– Longer term core plus style assets
– Option exposures
– Equity partnerships
A key to being able to deliver performance is a
commitment to remain a capital partner of choice. To
do this the Company needs to:
– Provide clear and timely feedback to funding requests
– Be flexible in its ability to structure transactions
– Reduce turnaround time for approval,
documentation and funding
Eildon Capital Limited will remain prudent and
conservative in the way transactions are assessed and
will continue to mitigate risk through the diligence and
ongoing management phases of an investment.
Deal flow into the Company is particularly strong
and it is likely that transaction volumes which are
undertaken will increase. It is forecast that the current
portfolio weighting toward debt will likely continue
given the market opportunity for involvement in this
segment of the property capital structure.
Targeted portfolio returns from investment remains
at 14% per annum which will be achieved through a
blend of qualifying transactions across asset classes,
geographies and risk positions.
Having raised capital during the financial year it
has been important to carefully select appropriate
investments that these funds can be deployed /
committed toward. At the start of August 2018, the
Company was fully deployed / committed. Prior
investments are starting to roll off and these funds
will be redeployed into qualifying investments as
this occurs.
The Company will continue to explore efficient
financing structures to improve returns and
performance for shareholders to optimise the
investment opportunity that exists in the current
market.
The Directors paid a final dividend of 1.925 cents
per share fully franked on 24 July 2018. It is
expected that Eildon Capital will continue to pay
fully franked quarterly dividends at this level.
The anticipated dividend payment calendar for the
next 12 months is as follows:
Quarter
Anticipated Payment Date
September, 2018
24 October, 2018
December, 2018
24 January, 2019
March, 2019
24 April, 2019
June, 2019
24 July, 2019
7
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only DIRECTORS’ REPORT
For the year ended 30 June 2018
The Directors present their report together with the
financial report of Eildon Capital Limited (the “Company”)
for the year ended 30 June 2018 and the Auditors’ Report
thereon.
DIRECTORS
The Directors in office at the date of this report and at all
times during the year are:
Mark Anthony Avery (Managing Director)
B.Com.Pl.Ds. (UOM)
Mr Avery began his professional career at Macquarie
Group in 2002 in the property finance and residential
development divisions. Mr Avery also worked for private
and listed property development and investment groups.
Mr Avery commenced at CVC Limited, the former parent
of the Company, in 2010, and has been responsible for all
of the group’s real estate investment activities, including
appointed as Managing Director of the Company in 2015.
He is also a director of Eildon Funds Management Limited.
Alexander Damien Harry Beard (Non-Executive
Director)
B.Com. (UNSW) FCA AICD
Mr Beard is a Chartered Accountant with extensive
experience in private equity investing. He is managing
director and Chief Executive Officer of CVC Limited
and director of US Residential Fund, Probiotec Limited,
Tasfoods Limited, Eildon Funds Management Limited
and formerly a Chairman and non-executive director of
Cellnet Group Limited. Mr Beard is a member of the Audit
Committee of the Company.
James R Davies (Independent Director)
Bachelor of Computing Science (University of New
England) MBA (London Business School)
Graduate of the Australian Institute of Company Directors
and member of the audit committee of the Company.
Mr Davies has over 30 years’ experience in investment
management across real estate, private equity,
infrastructure, natural resources and distressed asset
management. Most recently he was Head of Funds
Management at New Forests Asset Management.
Prior to that he held Director roles at Hastings Funds
Management Limited and Royal Bank of Scotland’s
Strategic Investments Group. He has sat on numerous
Investment Committees and Boards including as Chairman
of Timberlink Australia, Forico and Airport Rail Link.
Michelle E Harpur (Nee Phillips) (Independent Director)
B.A. (UNSW) L.L.B. (UNSW)
Chairman of the audit committee of the Company. She
completed and passed the Company Directors Course
with the AICD in early 2016, and in 2010 also attended a
Harvard Business School Executive Education Program
“Managing Professional Services Firms”. Mrs Harpur has
been a partner in mid-size, large and international law
firms since 1992, and is principle of Harpur Phillips. She
was admitted as a solicitor in 1986. Over many years, her
clients have included listed public companies and private
companies involved in property development, and in
addition to governance and risk management. She sits on
the Governance Committee of Lifeline Northern Beaches.
COMPANY SECRETARY
John Andrew Hunter
B.Com. (ANU), MBA (MGSM), MAppFin (MAFC), CA
Mr Hunter has experience in senior finance roles in the
Financial Services industry in retail and wholesale funds
management entities as well as holding senior finance
roles in various other public and private companies.
DIRECTORS’ MEETINGS
The number of directors’ meetings attended, and the
number of directors’ meetings eligible to attend during
their period in office by each of the Directors of the
Company during the financial year were as follows:
Number of
meetings attended
Number of
meetings held
M A Avery
A D H Beard
J R Davies
M E Harpur
4
4
4
4
4
4
4
4
AUDIT COMMITTEE MEETINGS
The Company has an audit committee. The number
of meetings and the number of meetings attended by
each of the Directors on the audit committee during the
financial year were:
Number of
meetings attended
Number of
meetings held
A D H Beard
J R Davies
M E Harpur
2
2
2
2
2
2
DIRECTORS’ BENEFITS
Information on Directors’ remuneration is included in the
remuneration report in the financial statements.
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EILDON CAPITAL LIMITED | 2018 Annual ReportFor personal use only
DIRECTORS’ INTERESTS IN SHARES OF THE COMPANY
The relevant interest of each director in the ordinary share capital of the Company at the date of this report is included in
the remuneration report.
PRINCIPAL ACTIVITIES
The Company is an active property investment company which participates in retail, industrial, residential and
commercial opportunities.
OPERATING RESULTS
The Company recorded an after tax profit of $3,006,055 (2017: $3,659,218).
DIVIDENDS
Dividends proposed or paid during the year and included within the statement of changes in equity by the Company are:
Cents
Per Share
Total
$
Date of
Payment
for Franking Percentage
Franked
Credits
Tax rate
2018 June quarter dividend on ordinary shares
1.925
885,887
24-Jul-18
2018 March quarter dividend on ordinary shares
1.925
885,699
24-Apr-18
2017 December quarter dividend on ordinary shares
1.925
885,699
5-Feb-18
2017 September quarter dividend on ordinary shares
1.7875
540,025
3-Oct-17
30%
30%
30%
30%
100%
100%
100%
100%
REVIEW OF OPERATIONS
During the financial year the Company completed a capital raising on 17 January 2018 including an invitation for existing
shareholders to participate in a Share Purchase Plan, at $1.05 per share. The total amount raised amounted $16.6 million,
with the additional funds to be deployed into further investment opportunities.
REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for key management personnel of the Company in
accordance with the requirements of the Corporations Act 2001 and its regulations. This information has been audited as
required by s. 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for
key management personnel who are defined as those persons having authority and responsibility for planning, directing
and controlling the major activities of the Company.
Remuneration philosophy
The performance of the Company depends upon its ability to attract and retain quality people. The Company is
committed to developing a remuneration philosophy of paying sufficient competitive ‘base’ rewards to attract and retain
high calibre personnel in order to create value for shareholders.
Remuneration structure
Non-Executive Director’s remuneration is solely in the form of fees and has been set by shareholders at a maximum
aggregate amount of $150,000, to be allocated amongst the Directors.
Other than the directors and company secretary there are no other key management personnel employed by the Company.
The Company does not have a remuneration committee with the remuneration of the non-executive directors
determined by the Board of the Company.
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2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED) (CONT.)
Remuneration of Key management personnel
The Company has no employees and the only key management personnel of the Company are the Directors and
company secretary. The total income paid or payable or otherwise made available, to all key management personnel of
the Company directly or indirectly from the entity or any related party include:
Directors
Mark Avery (b)
(Managing Director)
James Davies
(Non-Executive Chairman)
Alexander Beard (b)
(Non-Executive Director)
Michelle Harpur
(Non-Executive Director)
John Read
(Non-Executive Director)
Other Key Management Personnel
John Hunter (b)
(Company Secretary)
Base Salary
Fees
$
-
-
45,662
30,442
-
-
15,000
24,353
-
-
-
-
Post-Employment
Benefits
Superannuation
$
-
-
Total
$
Base %
(a)
-
-
-
-
4,338
2,891
50,000
33,333
-
-
25,000
2,314
-
5,000
-
-
40,000
26,667
-
5,000
-
-
-
-
100%
100%
-
-
100%
100%
-
100%
-
-
60,662
54,795
29,338
90,000
10,205
65,000
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
2017
Notes:
(a) Base % reflects the amount of base level remuneration that is not dependent on individual or the Company’s performance.
(b) The remuneration of Messrs Avery, Beard, and Hunter are paid by an associate of the manager of the Company, Eildon
Funds Management Limited.
Except as detailed above, no other amount of remuneration is paid to key management personnel in connection with the
management of the affairs of the Company.
10
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
Key management personnel holding of shares
The relevant shareholding interests of key management personnel in the share capital of the Company as at the date of
this report is as follows:
Ordinary shares
Mr A.D.H. Beard
Mr M. A. Avery
Ms M. E. Harpur
Mr J. R. Davies
Mr J.A.H. Hunter
Opening
600,000
22,000
10,000
25,000
6,000
Purchases
Sales
64,285
14,285
9,523
984
-
-
-
-
-
-
Closing
664,285
36,285
19,523
25,984
6,000
CONSEQUENCES OF PERFORMANCE ON SHAREHOLDER WEALTH
In considering the Company’s performance and benefits for shareholder wealth, the Directors have regard to the
following indicators in respect of the current financial year and previous financial year.
Net profit after tax
Comprehensive loss
Total comprehensive income
Dividends paid
Shares bought back on market
Share price
Net assets per share
Change in net assets per share
2018
$
3,006,055
-
3,006,055
3,197,311
-
1.04
1.04
(0.01)
2017
$
3,659,218
(48,304)
3,610,914
2,012,822
-
1.05
1.05
0.06
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS OF THE COMPANY
There were no significant changes in the state of affairs of the Company that occurred during the year not otherwise
disclosed in this report or in the financial statements.
LIKELY DEVELOPMENTS AND FUTURE EXPECTATIONS
The Company will continue to assess Australian investment opportunities. As an investment company, the results of the
Company are dependent on the timing of and opportunities for the realisation of investments. Accordingly, it is
not possible at this stage to predict the future results of the Company.
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2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
DIRECTORS’ REPORT
EVENTS SUBSEQUENT TO REPORTING DATE
A fully franked dividend of 1.925 cents per share amounting to $885,887 was declared on 26 June 2018 and paid 24 July
2018 of which $20,656 was reinvested under the Dividend Reinvestment Plan.
Subsequent to year end, on 23 August 2018 a loan agreement was entered into to provide a $4.0 million construction
facility for a mixed-use townhouse and apartment project in Bulimba, Queensland of which $2.1 million was drawn on
27 August 2018.
Other than as set out above, there are no matters or circumstances that have arisen since the end of the financial period
which significantly affected or may significantly affect the operations of the Company, the results of those operations or
the state of affairs of the Company in financial periods subsequent to 30 June 2018.
INSURANCE PREMIUMS
The Company has not, during the year or since the end of the financial year, in respect of any person who is or has been
an auditor of the Company or a related body corporate paid or agreed to pay a premium in respect of a contract insuring
against a liability for the costs or expenses of defending legal proceedings.
Insurance premiums have been paid in respect of director’s and officer’s liability and legal expense insurance for
directors and officers of the Company. In accordance with subsection 300(9) of the Corporations Act 2001 further
details have not been disclosed due to confidentiality provisions contained in the insurance contract.
AUDITOR INDEPENDENCE AND NON-AUDIT SERVICES
The Company appointed HLB Mann Judd (NSW Partnership) as the auditors for the 2018 financial year. During the
financial year no non-audit services were provided.
A copy of the Independence Declaration is included on page 13. Further information on Auditors’ Remuneration is
included in note 2.
Signed in accordance with a resolution of Directors.
Dated at Sydney 30 August 2018
Mark Avery
Director
Alexander Beard
Director
12
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only AUDITOR’S
INDEPENDENCE DECLARATION
As lead auditor for the audit of the financial report of Eildon Capital Limited for the year ended 30 June 2018, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
(a)
the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(b) any applicable code of professional conduct in relation to the audit.
M D Muller
Partner
Sydney, NSW
30 August 2018
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2018 Annual Report | EILDON CAPITAL LIMITEDFor the year ended 30 June 2018For personal use only
STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2018
Notes
2018
$
2017
$
5,185,636
-
100,182
187,556
-
5,473,374
3,240,966
1,665,587
678,302
352,172
100
5,937,127
(81,920)
118,012
INCOME
Interest income
Net gain on sale of equity investments
Impairment recovery
Fee income
Other income
Total income
Share of net (loss)/profit of associate accounted for using
the equity method
EXPENSES
Accountancy
Audit fees
Insurance
Legal fees
Directors fees
Management fees
Net loss on sale of equity investments
Share registry
Capital raising expenses
Other expenses
Total expenses
Profit before income tax
Income tax expense
Net profit after tax
Basic earnings per share (cents)
Diluted earnings per share (cents)
7
2
17
3
10
10
Other comprehensive income
Amount transferred from other reserves to other comprehensive income on sale
Income tax on items taken directly from equity
Other comprehensive loss for the year, net of tax
19,390
46,950
72,802
2,796
90,000
596,828
99,049
64,297
-
104,978
1,097,090
4,294,364
1,288,309
3,006,055
7.90
7.90
-
-
-
10,290
36,250
32,011
3,003
65,000
361,135
-
36,559
248,543
34,894
827,685
5,227,454
1,568,236
3,659,218
15.91
15.91
(69,006)
20,702
(48,304)
3,610,914
Total comprehensive income for the year
3,006,055
The above statement of profit or loss and other comprehensive income should be read in conjunction with the notes to the
financial statements set out on pages 18 to 34.
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EILDON CAPITAL LIMITED | 2018 Annual ReportFor personal use only
STATEMENT OF FINANCIAL POSITION
As at 30 June 2018
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Loans and receivables
Total current assets
NON-CURRENT ASSETS
Loans and receivables
Investments accounted for using the equity method
Financial assets – “at fair value through profit or loss”
Deferred tax assets
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Current tax liabilities
Total current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained earnings
Profit distribution reserve
TOTAL EQUITY
Notes
2018
$
2017
$
5
6
8
8
7
3
9
3
1 1
12
13
10,209,431
60,430
29,279,007
39,548,868
5,987,361
3,027,607
469,668
391,041
9,875,677
6,150,747
51,261
20,802,203
27,004,211
3,098,444
3,360,477
-
381,753
6,840,674
49,424,545
33,844,885
1,013,388
538,803
1,552,191
1,552,191
576,471
1,441,476
2,017,947
2,017,947
47,872,354
31,826,938
44,344,011
(5,483,508)
9,011,851
47,872,354
28,107,339
(5,483,508)
9,203,107
31,826,938
The above statement of financial position should be read in conjunction with the notes to the financial statements set out on
pages 18 to 34.
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2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
STATEMENT OF CHANGES IN EQUITY
Contributed
equity
$
Retained
earnings
$
Profit
distribution
reserve
$
Other
reserves
$
At 1 July 2017
28,107,339
(5,483,508)
9,203,107
Profit for the year
Total comprehensive income for the year
-
-
3,006,055
3,006,055
-
-
Transactions with shareholders:
Shares issued
Capital raising transaction cost
Tax on transaction cost
Dividend provided or paid
Transfers (to)/from reserve
16,598,808
(517,337)
155,201
-
-
-
-
-
-
(3,006,055)
-
-
-
(3,197,311)
3,006,055
At 30 June 2018
44,344,011
(5,483,508)
9,011,851
-
-
-
-
-
-
-
-
-
Total
$
31,826,938
3,006,055
3,006,055
16,598,808
(517,337)
155,201
(3,197,311)
-
47,872,354
At 1 July 2016
14,885,446
(5,483,508)
6,650,421
954,594
17,006,953
Profit for the year
Other comprehensive loss
Total comprehensive income/(loss)
for the year
-
-
-
3,659,218
-
3,659,218
-
-
-
-
(48,304)
3,659,218
(48,304)
(48,304)
3,610,914
Transactions with shareholders:
Shares issued
Capital raising transaction cost
Tax on transaction cost
Dividend provided or paid
Transfer of share based payment
on sale of associate
Transfers (to)/from reserve
13,603,735
(545,489)
163,647
-
-
-
-
-
-
-
-
(2,012,822)
-
-
-
-
13,603,735
(545,489)
163,647
(2,012,822)
-
-
-
(3,659,218)
906,290
3,659,218
(906,290)
-
-
-
At 30 June 2017
28,107,339
(5,483,508)
9,203,107
-
31,826,938
The above statement of changes in equity should be read in conjunction with the notes to the financial statements set out on
pages 18 to 34.
16
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
STATEMENT OF CASH FLOWS
Cash flows from operating activities
Cash receipts in the course of operations
Cash payments in the course of operations
Proceeds from disposal of financial assets at fair value
through profit and loss
Loan repaid
Loan provided
Interest and fee income received
Dividends received
Income tax paid
Notes
2018
$
2017
$
187,557
(933,978)
1,133
11,407,785
(20,403,972)
2,843,855
-
(2,045,069)
352,383
(625,701)
-
6,838,708
(15,957,266)
1,507,560
126,700
(671,768)
Net cash used in operating activities
5(b)
(8,942,689)
(8,429,384)
Cash flows from investing activities
Payments for equity investments
Proceeds from equity investments
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Dividends paid
Proceeds from issue of shares
Payment for share issue transaction cost
Net cash provided by financing activities
Net increase in cash held
Cash and cash equivalents at the beginning of the financial year
(469,568)
250,950
(218,618)
(2,841,774)
16,589,134
(527,369)
13,219,991
4,058,684
6,150,747
Cash and cash equivalents at the end of the financial year
5(a)
10,209,431
(3,368,780)
6,585,517
3,216,737
(1,472,797)
13,603,735
(784,000)
11,346,938
6,134,291
16,456
6,150,747
The above statement of cash flows should be read in conjunction with the notes to the financial statements set out on
pages 18 to 34.
17
2018 Annual Report | EILDON CAPITAL LIMITEDFor the year ended 30 June 2018For personal use only
NOTES TO THE FINANCIAL STATEMENTS
CONTENTS
Note
1:
Statement of Accounting Policies ...................... 18
2: Auditor’s Remuneration ...........................................21
3:
Income Tax ....................................................................21
4: Dividends ......................................................................22
5: Notes to the Statement of Cash Flows .............23
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES
The significant policies which have been adopted in the
preparation of this financial report are:
a) Basis of Preparation
The financial report is a general-purpose financial
report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian
Accounting Standards. The financial report has been
prepared on a historical cost basis, except for “available-
for-sale” investments which have been measured at fair
value.
6: Trade and Other Receivables ...............................24
The financial report is presented in Australian dollars.
7:
Investments Accounted for Using the
Equity Method ............................................................24
8: Loans and Receivables ............................................26
9: Trade and Other Payables .....................................26
10: Earnings Per Share ....................................................26
1 1: Contributed Equity ................................................... 27
12: Retained Earnings ..................................................... 27
13: Profit Distribution Reserve .................................... 27
14: Other Reserves ...........................................................28
15: Financial Instruments ...............................................28
16: Segmental Information ............................................32
17: Related Party Information ......................................33
18: Commitments and Contingent Liabilities ........34
19: Other Information ......................................................34
20: Subsequent Events ...................................................34
Management is required to make judgements, estimates
and assumptions in relation to the carrying value of
assets and liabilities, that have significant risk of material
adjustments in the next year and these have been
disclosed in the relevant notes to the financial statements.
b) Statement of Compliance
The financial report complies with Australian Accounting
Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). The
financial report also complies with International Financial
Reporting Standards (IFRS).
There are no standards, interpretations or amendments to
existing standards that are effective for the first time for
the financial year commencing 1 July that have a material
impact on the Company.
Certain new accounting standards and interpretations
have been published that are not mandatory for the 30
June 2018 reporting period:
(i) AASB 9 Financial Instruments
AASB 9 Financial Instruments was released in December
2014 and is mandatory for periods beginning on or after 1
January 2018. The Standard addresses the classification,
measurement and derecognition of financial assets
and financial liabilities, introduces new rules for hedge
accounting and a new impairment model for financial
assets.
The Company has yet to undertake a detailed assessment
of the classification and measurement of financial assets.
The financial assets held by the group include loans and
receivables currently measured at amortised cost using
the effective interest rate method which would likely
continue to be measured on the same basis under the
standard.
Accordingly the Company does not expect the new
guidance to have a significant impact on the classification
and measurement of its financial assets.
18
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only The new impairment model requires the recognition of
impairment provisions based on expected credit losses
rather than only incurred credit losses as is the case under
AASB 139. While the Company has not yet undertaken
a detailed assessment of how its impairment provisions
would be affected by the new model, it may result in an
earlier recognition of credit losses.
e) Trade and Other Payables
Trade payables and other payables are carried at
amortised cost and represent liabilities for goods and
services provided to the Company prior to the end of the
financial year that are unpaid. The amounts are unsecured
and are usually paid within 30 days of recognition.
The new standard also introduces expanded disclosure
requirements and changes in presentation. These
are expected to change the nature and extent of the
Company’s disclosures about its financial instruments
particularly in the year of the adoption of the new
standard.
(ii) AASB 15 Revenue from contracts with customers
AASB 15 Revenue from contracts with customers was
released in October 2015 and is mandatory for periods
beginning on or after 1 January 2018. The standard is
based on the principle that revenue is recognised when
control of a good or service transfers to a customer –
so the notion of control replaces the existing notion of
risks and rewards. The Company does not expect the
new standard to have any material impact on the timing
of recognition of its revenues in the initial period of
application.
c) Cash and Cash Equivalents
For the statement of cash flows, cash includes cash on
hand and short-term deposits with an original maturity of
three months or less.
d) Revenue Recognition
Interest Income
Revenue is recognised as interest accrues using the
effective interest method. This is a method of calculating
the amortised cost of a financial asset and allocating
the interest income over the relevant period using the
effective interest rate, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial asset to the net carrying
amount as at the end of the financial year.
Fee Income
Fees and commissions that relate to the execution of a
significant act (for example, advisory or arrangement
services, placement fees and underwriting fees) are
recognised when the significant act has been completed.
Fees charged for providing ongoing services (for example,
managing and administering existing facilities and funds)
are recognised as income over the service period.
Other Income
Revenue is recognised when the Company’s right to
receive payment is established.
f) Trade and Other Receivables
Trade and other receivables, which generally have 30
day terms, are recognised initially at fair value and
subsequently measured at amortised cost using the
effective interest method, with any difference between
cost and recoverable value being recognised in net
income over the period on an effective interest basis.
An allowance for doubtful debts is made when there is
objective evidence that the Company will not be able
to collect the debts. Bad debts are written off when
identified.
g) Investments and Other Financial Assets
Financial assets are classified as either financial assets
at fair value through profit or loss, loans and receivables,
“held-to-maturity” investments, or “available-for-sale”
investments. The classification depends on the purpose
for which the investments were acquired. When financial
assets are recognised initially, they are measured at fair
value, plus, in case of investments not at fair value
through profit or loss, transaction costs. The Company
determines the classification of its financial assets at
initial recognition and re-evaluates this designation at
each financial year-end.
The purchase and sale of financial assets are recognised
on the trade date i.e. the date that the Company commits
to purchase the asset.
The Company assesses at each reporting date whether
there is objective evidence that a financial asset or group
of financial assets is impaired. In the case of investments
classified as “available-for-sale”, a significant or prolonged
decline in the fair value of a security below its cost is
considered as an indicator that the securities are impaired.
If any such evidence exists for “available-for-sale” financial
assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value,
less any impairment loss on that financial asset previously
recognised in the statement of profit or loss and other
comprehensive income – is removed from equity and
recognised in the statement of profit or loss and other
comprehensive income. Impairment losses recognised in
the statement of profit or loss and other comprehensive
income on equity instruments classified as “available-for-
sale” are not reversed through the statement of profit or
loss and other comprehensive income.
19
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF ACCOUNTING
POLICIES (CONT.)
g) Investments and Other Financial Assets (Cont.)
Associates
Associates are those entities, other than partnerships,
over which the Company exercises significant influence
but not control. The Company generally deems it has
significant influence if it has over 20% of the voting rights,
but no more than 50%.
Investments in associates are carried in the statement of
financial position at cost plus post-acquisition changes
in the Company’s share of net assets in the associates.
Following initial recognition the Company assesses
whether it is necessary to recognise any impairment loss
with respect to the investment in the associate.
The Company’s equity accounted share of the associates’
post-acquisition profits or losses is recognised in the
statement of profit or loss and other comprehensive
income, and its share of post-acquisition movements in
reserves is recognised in reserves. The cumulative post-
acquisition movements are adjusted against the carrying
amount of the investment.
When the Company’s share of losses in an associate
equals or exceeds its interest in the associate, including
any unsecured long-term receivables and loans, the
Company does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the
associate.
Loans and Receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted
in an active market. Such assets are carried at amortised
cost using the effective interest method. Gains and losses
are recognised in the statement of profit or loss and other
comprehensive income when the loans and receivables
are derecognised or impaired, as well as through the
amortisation process.
At fair value through profit or loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is
classified in this category if acquired principally for
the purpose of selling in the short term. After initial
recognition “at fair value through profit or loss” assets
are measured at fair value with gains or losses being
recognised in the statement of profit or loss and other
comprehensive income.
The fair value of investments that are actively traded in
organised financial markets is determined by reference to
quoted market bid prices at the close of business on the
reporting date.
h) Income Tax and Other Taxes
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the taxation authorities on the
current period’s taxable income at the tax rates enacted
by the reporting date. Deferred income tax assets and
liabilities are measured at the tax rates that are expected
to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws)
that have been enacted or substantively enacted at the
reporting date.
Deferred income tax is provided on all temporary
differences at the reporting date between the tax bases
of assets and liabilities and their carrying amounts for
financial reporting purposes. Deferred income tax assets
are recognised for all deductible temporary differences,
carry-forward of unused tax credits and unused tax losses,
to the extent that it is probable that taxable profits will be
available against which deductible temporary differences
and the carry-forward of unused tax credits and tax
losses can be utilised. Unrecognised deferred income
tax assets are reassessed at each reporting date and are
recognised to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be
recovered.
The carrying amount of deferred income tax assets is
reviewed at each reporting date and reduced to the
extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
Income taxes relating to items recognised directly in
equity are recognised in equity and not in comprehensive
income.
Goods and Services Tax
Revenues, expenses and assets are recognised net of the
amount of Goods and Services Tax (GST), except:
– when the GST incurred on a purchase of goods and
services is not recoverable from the taxation authority,
in which case the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the
expense item as applicable; and
– receivables and payables, which are stated with the
amount of GST included.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the statement of financial position.
20
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only Cash flows are included in the statement of cash flows
on a gross basis and the GST component of cash flows
arising from investing and financing activities which are
recoverable from, or payable to, the taxation authority are
classified as operating cash flows.
for the amount by which the asset’s carrying amount
exceeds its recoverable amount. Non-financial assets that
suffered an impairment are tested for possible reversal of the
impairment whenever events or changes in circumstances
indicate that the impairment may have reversed.
i) Contributed Equity
l) Share-based Payments
Issued capital is recognised at the fair value of the
consideration received by the Company. Incremental
costs directly attributable to the issue or cancellation of
shares are shown in equity as a deduction, net of tax, from
proceeds.
The Company provides benefits to employees (including
senior executives) of the Company in the form of share-
based payments, whereby employees render services in
exchange for shares or rights over shares (equity-settled
transactions).
j) Segment Reporting
A business segment is a distinguishable component of the
entity that is engaged in providing differentiated products
or services.
The cost of these equity-settled transactions with
employees is measured by reference to the fair value
of the equity instruments at the date at which they are
granted, and amortised over the term of the plan.
k) Impairment
Assets are tested for impairment whenever events or
changes in circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is recognised
m) Profit distribution reserve
Profits transferred to the profit distribution reserve
are segregated to facilitate potential future dividend
payments that may be declared by the directors.
NOTE 2: AUDITOR’S REMUNERATION
The auditor of the Company is HLB Mann Judd NSW Partnership.
Amounts received or due and receivable by the auditors for:
Audit and review of financial report
HLB Mann Judd NSW Partnership
Non-audit services
HLB Mann Judd Assurance (NSW) Pty Ltd
NOTE 3: INCOME TAX
(a) Income tax expense
Accounting profit before income tax
Income tax expense at the statutory income tax rate of 30%
The major components of income tax expense are:
- Current income tax charge
- Deferred income tax
Income tax expense reported in the statement of profit or loss and
other comprehensive income
Deferred tax benefit relating to items credited directly to equity
2018
$
2017
$
46,950
36,250
-
20,900
4,294,364
1,288,309
1,170,560
117,749
1,288,309
88,900
5,227,454
1,568,236
1,441,476
126,760
1,568,236
595,557
21
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3: INCOME TAX (CONT.)
(b) Deferred income tax
Deferred income tax balances at 30 June relates to the following:
2018
2017
Included in
income
$
Included in
equity
$
Total
$
Included in
income
$
Included in
equity
$
Total
$
Deferred tax assets
Provisions and accrued expenses
Impairment expenses
Tax losses
Equity accounted income
Other
8,100
-
106,858
-
46,151
-
-
-
-
229,932
8,100
-
106,858
-
276,083
6,594
30,055
77,144
2,606
63,160
-
-
-
-
202,194
6,594
30,055
77,144
2,606
265,354
161,109
229,932
391,041
179,559
202,194
381,753
(c) Current Tax Liabilities
Income tax payable
Balance at the end of the year
NOTE 4: DIVIDENDS
2018
$
2017
$
538,803
1,441,476
Dividends proposed or paid in previous years and included within the statement of changes in equity by the Company
are:
Cents
Per Share
Total
$
Date of
Payment
for Franking Percentage
Franked
Credits
Tax rate
2018 June quarter dividend on ordinary shares
1.925
885,887
24-Jul-18
2018 March quarter dividend on ordinary shares
1.925
885,699
24-Apr-18
2017 December quarter dividend on ordinary shares
1.925
885,699
5-Feb-18
2017 September quarter dividend on ordinary shares
1.7875
540,025
24-Oct-17
2017 June quarter dividend on ordinary shares
1.7875
540,025
24-Jul-17
2017 March quarter dividend on ordinary shares
1.375
415,404
24-Apr-17
2016 December quarter dividend on ordinary shares
3.5
1,057,393
22-Mar-17
30%
30%
30%
30%
30%
30%
30%
100%
100%
100%
100%
100%
100%
100%
22
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
2018
$
2017
$
Dividend franking account:
Franking credits available to shareholders for subsequent financial years
2,277,568
2,534,057
The franking account is stated on a tax paid basis. The balance comprises the franking account at year end adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the refund of overpaid tax instalments paid;
(c) franking debits that will arise from the payment of dividends recognised as a liability at year end;
(d) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
(e) franking credits that the entity may be prevented from distributing in subsequent years.
The ability to utilise the franking credits is dependent upon there being sufficient available equity to declare dividends.
2018
$
2017
$
NOTE 5: NOTES TO THE STATEMENT OF CASH FLOWS
(a) Reconciliation of cash and cash equivalents
For the purposes of the statement of cash flows, cash and cash equivalents
comprise the following at the end of the financial year:
Cash at bank
10,209,431
6,150,747
Cash at bank earns interest at floating rates based on daily bank deposit rates.
The carrying amount of cash and cash equivalents represents fair value.
(b) Reconciliation of profit after income tax to net cash from operations
Net profit after tax
Adjustments for:
Recovery of equity investment impairment
Net gain on sale of equity investments
Share of equity accounted loss/(profits)
Increase in capital raising cost
Change in operating assets and liabilities:
Increase in other assets
Increase in interest bearing loans
Increase in GST
Decrease in dividend income
Increase in payables
Increase in deferred tax assets and liabilities
Increase/(decrease) in sundry creditors and accruals
(Decrease)/increase in tax payable
3,006,055
3,659,218
-
-
81,920
-
(5,110)
(11,337,967)
(4,058)
-
69,250
145,913
3,981
(902,673)
(678,302)
(1,665,587)
(118,012)
248,543
(37,748)
(10,851,962)
(2,932)
126,700
1,189
155,370
(6,959)
741,098
Net cash used in operating activities
(8,942,689)
(8,429,384)
23
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6: TRADE AND OTHER RECEIVABLES
Current:
Goods and services tax
Prepayments
Trade and other receivables are generally on 30 day terms.
2018
$
2017
$
13,530
46,900
60,430
═════════
9,471
41,790
51,261
═════════
NOTE 7: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
Interest in ordinary shares of associate
79 Logan Road Trust (a)
79 Logan Road Pty Limited (b)
Kingsgrove (Vanessa Road) Unit Trust (c)
Ownership Interest
Investment Carrying Amount
2018
%
2017
%
2018
$
2017
$
35
35
25
35
35
25
3,027,572
35
-
3,360,442
35
-
3,027,607
3,360,477
(a) 79 Logan Road Trust is a commercial property in Woolloongabba, Queensland with a long term lease to an ASX listed entity,
with residential development approval. The carrying value of 79 Logan Road Trust has been calculated as $3,027,572 based
on the net asset backing methodology, using the most recent reports provided by the company.
(b) 79 Logan Road Pty Limited is the trustee of 79 Logan Road Trust.
(c) Kingsgrove (Vanessa Road) Unit Trust is a residential property development in Kingsgrove, New South Wales.
24
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
NOTE 7: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONT.)
Summarised financial information
The following table illustrates summarised financial information relating to the Company’s associates:
79 Logan Road Trust
Summarised balance sheet
Current assets
Current liabilities
Current net assets
Non-current assets
Non-current liabilities
Non-current net assets
Net assets
Reconciliation to carrying amounts:
Opening net assets 1 July
Profit for the period
Share issued
Return of capital
Dividend paid
Closing net assets
The Company’s share - percentage
The Company’s share - dollars
Carrying amount
Summarised statement of comprehensive income
Revenue
Net profit
Other comprehensive income
Total comprehensive income
Dividends received
2018
$
55,692
46,958
8,734
20,131,472
11,490,000
8,641,472
8,650,206
9,601,264
(234,058)
-
(700,501)
(16,499)
8,650,206
35%
3,027,572
3,027,572
1,074,292
(234,058)
-
(234,058)
5,775
2017
$
142,468
41,458
101,010
20,990,254
11,490,000
9,500,254
9,601,264
-
337,178
9,626,086
-
(362,000)
9,601,264
35%
3,360,442
3,360,442
766,667
337,178
-
337,178
126,700
Individually immaterial investments accounted for using the equity method
In addition to the interests in investments accounted for using the equity method disclosed above, the Company also has
interests in a number of individually immaterial investments that are accounted for using the equity method.
Aggregate carrying amount of individually immaterial investments
accounted for using the equity method
Aggregate amounts of the Company’s share of profit for the period
Total comprehensive income
2018
$
35
-
-
2017
$
35
-
-
25
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
NOTE 8: LOANS AND RECEIVABLES
Current:
Secured loans to other corporations
Unsecured loan to related entity
Non-Current:
Secured loans to other corporations
Unsecured loan to related entity
NOTE 9: TRADE AND OTHER PAYABLES
Current:
Sundry creditors and accruals
Dividend payable
2018
$
2017
$
29,279,007
-
29,279,007
5,861,811
125,550
5,987,361
20,718,653
83,550
20,802,203
3,098,444
-
3,098,444
127,501
885,887
1,013,388
36,446
540,025
576,471
Trade and sundry creditors are non-interest bearing and are generally on 30 day terms.
NOTE 10: EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
2018
Cents
7.90
7.90
$
2017
Cents
15.91
15.91
$
Net profit attributable to shareholders used in calculation of
basic and diluted earnings per share
3,006,055
3,659,218
Weighted average number of shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share
38,067,694
22,999,574
Number
Number
26
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
NOTE 11: CONTRIBUTED EQUITY
Issued and paid up share capital:
Ordinary shares fully paid
Ordinary shares:
Balance at the beginning of the year
Issue of shares
Transaction costs of share issue
Income tax on share transaction costs
2018
2017
Number of
shares
$
Number of
shares
$
46,020,079
44,344,011
30,211,208
28,107,339
30,211,208
15,808,871
-
28,107,339
16,598,808
(517,337)
155,201
17,244,172
12,967,036
-
-
14,885,446
13,603,735
(545,489)
163,647
Balance at the end of the year
46,020,079
44,344,011
30,211,208
28,107,339
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up the company in proportion
to the number of shares held.
Total capital of the Company is as follows:
Total equity
Net assets per share
2018
$
2017
$
47,872,354
31,826,938
1.04
1.05
The Company is not subject to any externally imposed capital requirements. Management’s objective is to achieving
returns for shareholders commensurate with the risks associated with making investments in Australia.
NOTE 12: RETAINED EARNINGS
Retained earnings at the beginning of the year
Net profit attributable to members
Transfers to profit distribution reserve
Retained earnings at the end of the year
NOTE 13: PROFIT DISTRIBUTION RESERVE
Profit distribution reserve at the beginning of the year
Transfers from retained earnings
Transfer of share based payment on sale of associate
Dividend paid
Profit distribution reserve at the end of the year
(5,483,508)
3,006,055
(3,006,055)
(5,483,508)
3,659,218
(3,659,218)
(5,483,508)
(5,483,508)
9,203,107
3,006,055
-
(3,197,311)
9,011,851
6,650,421
3,659,218
906,290
(2,012,822)
9,203,107
Profits transferred to the profit distribution reserve are segregated to facilitate potential future dividend payments that
may be declared by the directors.
27
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14: OTHER RESERVES
Year ended 30 June 2017
At the beginning of the year
Amount transferred from other reserves to other
comprehensive income on sale
Income tax effect on amount transferred from other
reserves to other comprehensive income on sale
Transfer of share based payment on sale of associate
At the end of the year
Nature and purpose of reserve
Market Value
Reserve
$
Share Based
Payments Reserve
$
Total
$
48,304
906,290
954,594
(69,006)
-
(69,006)
20,702
-
-
-
(906,290)
20,702
(906,290)
-
-
Market value reserve
The market valuation reserve is used to record increments and decrements in the fair value of “available-for-sale”
financial assets to the extent that they offset one another.
Share based payments reserve
The share based payments reserve is used to record the value of share based payments for the Company and associate
entity provided to key management personnel.
NOTE 15: FINANCIAL INSTRUMENTS
The Company’s activities expose it to a variety of financial risks: market risk (including market price risk and interest rate
risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on financial performance.
The Company uses different methods to measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange and price risk.
The responsibility for operational risk management resides with the Board of Directors who seeks to manage the
exposure of the Company. There have been no significant changes in the types of financial risks or the Company’s risk
management program (including methods used to measure the risks) since the prior year.
28
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
NOTE 15: FINANCIAL INSTRUMENTS (CONT.)
(a) Interest Rate Risk
The Company’s exposure to interest rate risks and the effective interest rates of financial assets and liabilities both
recognised and unrecognised at the reporting date are as follows:
Note
Floating
interest
rate
$
Fixed interest rate
1 year
or less
$
1 to 5
years
$
Non-
interest
bearing
$
Total
$
2018
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans and receivables
Financial liabilities
Trade and other payables
2017
Financial assets
Cash and cash equivalents
Trade and other receivables
Loans and receivables
Financial liabilities
Trade and other payables
5
6
8
9
5
6
8
9
10,209,431
-
-
-
-
29,279,007
-
-
5,987,361
-
60,430
-
10,209,431
60,430
35,266,368
10,209,431
29,279,007
5,987,361
60,430
45,536,229
-
-
-
1,013,388
1,013,388
6,150,747
-
-
-
-
20,802,203
-
-
3,098,444
-
51,261
-
6,150,747
51,261
23,900,647
6,150,747
20,802,203
3,098,444
51,261
30,102,655
-
-
-
576,471
576,471
The Company holds a significant amount of cash balances which are exposed to movements in interest rates. To reduce
the risk the Company typically deposits uncommitted cash with financial institutions at fixed rates with maturity of
between 30 – 90 days. Interest bearing loans and receivables are made at a mix of fixed and floating rates.
Sensitivity
As the Company expects interest rates to increase by 50 basis points during the 2019 financial year (2018: increase by
50 basis points), at reporting date the impact for the 2018 financial year on the Company, with all other varieties held
constant, would be:
2018
Net profit
Equity increase
2017
Net profit
Equity increase
Increase of 50 bp
$
38,098
(38,098)
35,275
35,275
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2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
NOTE 15: FINANCIAL INSTRUMENTS (CONT.)
(b) Credit Risk Exposure
Credit risk refers to the loss that the Company would incur if a debtor or counterparty fails to perform under its
obligations. The carrying amounts of financial assets recognised in the statement of financial position best represent the
Company’s maximum exposure to credit risk at reporting date. The Company seeks to limit its exposure to credit risk by
performing appropriate background investigations on counterparties before entering into arrangements with them and
seek collateral with a value in excess of the counterparty’s obligations to the Company, providing a “margin of safety”
against loss.
The Company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with
a number of counterparties, and is managed through normal payment terms of 30 days. At reporting date there are no
overdue trade debtors.
The credit quality of financial assets that are neither past due nor impaired is as follows:
Cash and cash equivalents
10,209,431
6,150,747
2018
$
2017
$
Trade and other receivables
Government
Other – unrated
Loans and receivables
Other – unrated
(c) Liquidity Risk
13,530
46,900
60,430
9,471
41,790
51,261
35,266,368
23,900,647
The Company manages liquidity risk by maintaining sufficient cash balances and holding liquid investments that could
be realised to meet commitments. The Company continuously monitors forecast and actual cash flows and matches the
maturity profiles of financial assets and liabilities.
The following table details the Company’s contractual liabilities.
Less than 6 months
$
Total
$
1,013,388
1,013,388
576,471
576,471
2018
Trade and other payables
2017
Trade and other payables
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EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
NOTE 15: FINANCIAL INSTRUMENTS (CONT.)
(d) Fair Value of Financial Assets and Liabilities
The fair values of the financial assets and liabilities of the Company are approximately equal to their carrying values. No
financial assets or financial liabilities are readily traded on organised markets in standardised form.
Judgements and estimates were made in determining the fair values of the financial instruments and non-financial assets
that are recognised and measured at fair value in the financial statements. To provide an indication about the reliability
of the inputs used in determining fair value, the Company has classified its financial instruments and non-financial assets
into three levels prescribed under the accounting standards.
Level 1 – the fair value is calculated using quoted prices in active markets.
Level 2 –
the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for
the asset, either directly (as prices) or indirectly (derived from prices).
the fair value is estimated using inputs for the asset that are not based on observable market data.
Level 3 –
The fair value of the financial instruments as well as the methods used to estimate the fair value are summarised in the
table below.
Valuation technique – non market
observable inputs (Level 3)
$
Year ending 30 June 2018
Financial assets
“Investment at fair value through profit or loss”
Unlisted shares at market value
Loans and receivables
Secured loans to other corporations
Total financial assets
Year ending 30 June 2017
Loans and receivables
Secured loans to other corporations
Total financial assets
Reconciliation of Level 3 fair value movements:
Balance at the beginning of the year
Shares purchased
Loans repaid
Loan provided
Interest and fees
Balance at the end of the year
469,668
35,266,368
35,736,036
23,900,647
23,900,647
2018
$
2017
$
23,900,647
469,668
(14,030,917)
20,403,971
4,992,667
13,048,683
-
(8,229,112)
15,957,266
3,123,810
35,736,036
23,900,647
There is no quantitative information for level 3 financial instruments. The fair value for Loans and receivables has been
determined based on the terms of the loan agreement. The fair value of Investment at fair value through profit or loss
has been determined based on acquisition cost.
31
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
NOTE 16: SEGMENTAL INFORMATION
The company operates in one business segment being an investment company and in one geographical location being
Australia for financial year 2018.
The revenues and results by business segments for financial year 2017 are as follows:
Year ended 30 June 2017
Revenues:
Total revenue for reportable segments
Unallocated amounts:
Interest income
Total revenue
Private Equity
and Venture Capital
$
Listed
Investments
$
Property
$
Total
$
1,936,674
407,215
3,475,980
5,819,869
117,258
5,937,127
Equity accounted income
-
-
118,012
118,012
Results:
Total profit for reportable segments
Share of profit of equity accounted investees
1,936,674
-
407,215
-
3,475,980
118,012
5,819,869
118,012
1,936,674
407,215
3,593,992
5,937,881
(2,278,663)
3,659,218
-
-
23,900,647
23,900,647
6,150,747
3,360,477
433,014
33,844,885
2,017,947
2,017,947
Unallocated amounts:
Corporate expenses
Total profit after tax
Assets:
Segment assets
Unallocated amounts:
Cash and cash equivalents
Equity accounted investments
Other assets
Total assets
Liabilities:
Unallocated amounts:
Other liabilities
Total liabilities
32
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
NOTE 17: RELATED PARTY INFORMATION
17.1 Key management personnel
Salary based payment
Post-employment benefits – superannuation
2018
$
60,662
29,338
90,000
2017
$
54,795
10,205
65,000
The only key management personnel of the Company are the directors and company secretary. The Company does not
have any other employees.
Detailed remuneration disclosures are provided in the remuneration report.
17.2 Transactions with related parties
The Company pays management fees to its investment manager, Eildon Funds Management Limited. Monthly
management fees have been calculated as one twelfth of 0.75% of the net asset value plus one twelfth of 1% of invested
capital of the Company, calculated as at the last day of the previous month, provided that each month the total
management fees shall not be less than $15,000. Management fees of $596,828 (2017: $361,135) were paid to Eildon
Funds Management Limited during the financial year. During the year Messrs Beard, Avery and Hunter were directors of
Eildon Funds Management Limited.
17.3 Loans to key management personnel
There were no loans to key management personnel during the year or existing at the end of the financial year.
17.4 Loan with related party
The Company provided a loan of $125,550 (2017: $83,550) to Kingsgrove (Vanessa Road) Unit Trust during the
financial year.
33
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
NOTES TO THE FINANCIAL STATEMENTS
NOTE 18: COMMITMENTS AND CONTINGENT LIABILITIES
2018
$
2017
$
18.1 Loans and other investments
Amounts available to be drawn by borrowers under existing loan facility agreements
Unrelated entities
5,805,196
2,555,368
18.2 Contingent liabilities
Commencing 1 January 2016, a performance fee is payable to Eildon Funds Management Limited where the Company
achieves an annual return during the calculation period of greater than the hurdle rate of 9% per annum. The
performance fee payable is calculated as 20% of the increase in the share price of the Company in excess of the 9%
hurdle rate, after factoring in dividends and other distributions.
No performance fee is payable for the 2018 and 2017 financial years.
NOTE 19: OTHER INFORMATION
The Company was incorporated on 23 February 1993. The Company is registered and domiciled in Australia.
Its registered office and principal place of business are at Level 25, 360 Collins Street, Melbourne Victoria 3000.
NOTE 20: SUBSEQUENT EVENTS
A fully franked dividend of 1.925 cents per share amounting to $885,887 was declared on 26 June 2018 and paid
24 July 2018 of which $20,656 was reinvested under the Dividend Reinvestment Plan.
Subsequent to year end, on 23 August 2018 a loan agreement was entered into to provide a $4.0 million construction
facility for a mixed-use townhouse and apartment project in Bulimba, Queensland of which $2.1 million was drawn on
27 August 2018.
Other than as set out above, there are no matters or circumstances that have arisen since the end of the financial
period which significantly affected or may significantly affect the operations of the Company, the results of those
operations or the state of affairs of the Company in financial periods subsequent to 30 June 2018.
34
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Eildon Capital Limited, we state that:
In the opinion of the Directors:
(a) the financial statements and notes of the Company are in accordance with Corporations Act 2001, including:
(i)
giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its performance
for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporation Regulations 2001.
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in
Note 1; and
(c)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
(d) the audited remuneration disclosures set out on pages 9 to 1 1 of the Directors’ Report comply with Accounting
Standards AASB 124 Related Party Disclosures and the Corporations Regulations 2001.
This declaration has been made after receiving the declarations required to be made to the Directors in accordance with
s. 295A of the Corporations Act 2001 for the financial period ended 30 June 2018.
Signed in accordance with a resolution of the Board of Directors.
Dated at Sydney 30 August 2018.
Mark Avery
Director
Alexander Beard
Director
35
2018 Annual Report | EILDON CAPITAL LIMITEDFor the year ended 30 June 2018For personal use only
INDEPENDENT AUDITOR’S REPORT
To the Members of Eildon Capital Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Eildon Capital Limited (“the Company”) which comprises the statement of
financial position as at 30 June 2018, the statement of profit or loss and other comprehensive income, the statement
of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements,
including a summary of accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Company is in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the Company’s financial position as at 30 June 2018 and of its financial performance
for the year then ended; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards
are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001
and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
financial report of the current period. These matters were addressed in the context of our audit of the financial report as
a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
Existence and Valuation of Loans Receivable (Note 8)
The Company had a significant balance of loans
receivable as at 30 June 2018.
We reviewed loan agreements and other supporting
documentation.
A large portion of the loans have been provided to
property developers with properties provided as
security for the loans.
We have therefore identified loans receivable as an
area requiring particular audit attention.
We obtained client workings and assessed
reasonableness of recoverability assessment, including
where relevant, the prospect of recovering the loan
within the next 12 months.
We reviewed security of loan and assessed for
reasonableness.
We obtained current external valuations, where
available, and assessed the competence, independence
and integrity of the external expert appointed by
management.
We obtained loan confirmation from third parties.
We considered the classification of the loan balance to
ensure it was reasonable.
36
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only Information Other than the Financial Report and
Auditor’s Report Thereon
The directors are responsible for the other information.
The other information comprises the information included
in the Company’s annual report for the year ended
30 June 2018, but does not include the financial report
and our auditor’s report thereon.
Our opinion on the financial report does not cover the
other information and accordingly we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to
be materially misstated.
If, based on the work we have performed, we conclude
that there is a material misstatement of this other
information, we are required to report that fact. We have
nothing to report in this regard.
Responsibilities of the Directors for the Financial
Report
The directors of the Company are responsible for the
preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a
true and fair view and is free from material misstatement,
whether due to fraud or error.
In preparing the financial report, the directors are
responsible for assessing the ability of the Company to
continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going
concern basis of accounting unless the directors either
intend to liquidate the Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the
Financial Report
Our objectives are to obtain reasonable assurance about
whether the financial report as a whole is free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users
taken on the basis of this financial report.
As part of an audit in accordance with the Australian
Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the
audit. We also:
– Identify and assess the risks of material misstatement
of the financial report, whether due to fraud or error,
design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of
internal control.
– Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness
of the Company’s internal control.
– Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by the directors.
– Conclude on the appropriateness of the directors’ use
of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s
ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related
disclosures in the financial report or, if such disclosures
are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events
or conditions may cause the Company to cease to
continue as a going concern.
– Evaluate the overall presentation, structure and content
of the financial report, including the disclosures, and
whether the financial report represents the underlying
transactions and events in a manner that achieves fair
presentation.
We communicate with the directors regarding, among
other matters, the planned scope and timing of the audit
and significant audit findings, including any significant
deficiencies in internal control that we identify during
our audit.
We also provide the directors with a statement that
we have complied with relevant ethical requirements
regarding independence, and to communicate with them
all relationships and other matters that may reasonably
be thought to bear on our independence, and where
applicable, related safeguards.
37
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only INDEPENDENT AUDITOR’S REPORT
Auditor’s Responsibilities for the Audit of the
Financial Report (Cont.)
From the matters communicated with the directors, we
determine those matters that were of most significance in
the audit of the financial report of the current period and
are therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter
should not be communicated in our report because the
adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such
communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the
directors’ report for the year ended 30 June 2018.
In our opinion, the Remuneration Report of Eildon Capital
Limited for the year ended 30 June 2018 complies with
section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the
preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
HLB Mann Judd
Chartered Accountants
M D Muller
Partner
Sydney, NSW
30 August 2018
38
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only CORPORATE GOVERNANCE STATEMENT
This Corporate Governance Statement, which has been
approved by the Board, describes Eildon Capital’s
corporate governance policies, framework and practices.
This statement is current as at 30 June 2018.
PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR
MANAGEMENT AND OVERSIGHT.
A listed entity should establish and disclose the
respective roles and responsibilities of board and
management and how their performance is monitored
and evaluated.
Recommendation 1.1 - A listed entity should disclose
the respective roles and responsibilities of its board and
management, and those matters expressly reserved to
the board and those delegated to management.
The business of Eildon Capital is managed under
the direction of the Board which is responsible for
its corporate governance. The Board comprises
Mr Alexander Beard, Mr Mark Avery, Mr James Davies
and Ms Michelle Harpur.
The Board meets on a regular basis and is required to
discuss pertinent business developments, investment
decisions and issues, and review the operations and
performance of Eildon Capital. The Board will seek to
ensure that the investment strategy is aligned with
the expectations of Shareholders and Eildon Capital is
effectively managed in a manner that is properly focused
on its investment strategy as well as conforming to
regulatory and ethical requirements.
Provision is made at each regular meeting of the Board
for the consideration of critical compliance and risk
management issues as they arise.
The primary objectives of the Board will be to:
– Set and review the strategic direction of Eildon Capital;
– Approve all material transactions;
– Approve and monitor financial policies and financial
statements;
– Establish, promote and maintain proper processes
and controls to maintain the integrity of financial
accounting, financial records and reporting;
– Develop and implement key corporate policies,
procedures and controls as necessary to ensure
appropriate standards of accountability, risk
management and corporate governance and
responsibility; and
– Ensure Shareholders receive high quality, relevant and
accurate information in a timely manner.
The Board has delegated responsibility for day-to-day
management of Eildon Capital to the Managing Director
and the Manager under its AFSL.
Recommendation 1.2 - A listed entity should:
(a) undertake appropriate checks before appointing
a person, or putting forward to security holders a
candidate for election as a director; and
(b) provide security holders with all material
information in its possession relevant to a decision
on whether or not to elect or re-elect a director.
Prior to appointing a director or putting forward a new
candidate for election, screening checks are undertaken
as to the person’s experience, education, criminal history
and bankruptcy history.
When presenting a director for re-election, Eildon Capital
provides shareholders with details of the directors skills
and experience, independence and current term served by
the director in office and whether the Board supports the
re-election.
Recommendation 1.3 - A listed entity should have
a written agreement with each director and senior
executive setting out the terms of their appointment.
The Company’s Non-Executive Directors have been
engaged according to Letters of Appointment.
Recommendation 1.4 - The company secretary of a listed
entity should be accountable directly to the board,
through the chair, on all matters to do with the proper
functioning of the board.
The Company Secretary is accountable to the Board,
through the Chairperson, for all governance matters.
Each Director has access to the Company Secretary.
The appointment and removal of the Company Secretary
must be determined by the Board as a whole.
Recommendation 1.5 - A listed entity should:
(a) have a diversity policy which includes requirements
for the board or a relevant committee of the board
for achieving gender diversity and to assess annually
both the objectives and the entity’s progress in
achieving them;
(b) disclose that policy or a summary of it; and
(c) disclose as at the end of each reporting period
the measurable objectives for achieving gender
diversity set by the board or a relevant committee
of the board in accordance with the entity’s diversity
policy and its progress towards achieving them, and
either:
(i) the respective proportions of men and women
on the board, in senior executive positions and
across the whole organisation (including how
the entity has defined “senior executive” for
these purposes); or
39
2018 Annual Report | EILDON CAPITAL LIMITEDFor the year ended 30 June 2018For personal use only
CORPORATE GOVERNANCE STATEMENT
(ii) if the entity is a “relevant employer” under the
Workplace Gender Equality Act, the entity’s
most recent “Gender Equality Indicators”, as
defined in and published under that Act.
The Company’s approach to business promotes a culture of
equal opportunity and has the core principles of meritocracy
based on ability, fairness and equality. Eildon Capital does
not discriminate on gender, race, religion or cultural grounds.
The Board has adopted a diversity policy, and although
Eildon Capital has no full time employees and the policy
applies to the appointment of directors and company
secretary. The board aims to:
The Board undertook a review of its performance, skills,
experience and expertise during the year.
Recommendation 1.7 - A listed entity should:
(a) have and disclose a process for periodically evaluating
the performance of its senior executives; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was undertaken in
the reporting period in accordance with that process.
Not applicable – Eildon Capital does not have any senior
executives.
– promote the principles of merit and fairness when
considering Board member appointments; and
PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD
VALUE.
– recruit from a diverse pool of qualified candidates,
seeking a diversity of skills and qualifications.
The Board’s composition is reviewed on an annual basis. In
the event a vacancy exists, the Board will include diversity
in its selection process.
As at 30 June 2018 the board of directors, including the
company secretary, comprised five members of which one
non-executive director is female.
A listed entity should have a board of an appropriate
size, composition, skills and commitment to enable it to
discharge its duties effectively.
Recommendation 2.1 - The board of a listed entity should:
(a) have a nomination committee which:
(i) has at least three members, a majority of whom
are independent directors; and
(ii) is chaired by an independent director; and disclose:
Recommendation 1.6 - A listed entity should:
(a) have and disclose a process for periodically
evaluating the performance of the board, its
committees and individual directors; and
(b) disclose, in relation to each reporting period,
whether a performance evaluation was undertaken in
the reporting period in accordance with that process.
The Board of Directors’ Charter requires:
– the Board to review its performance (at least annually)
against previously agreed measurable and qualitative
indicators;
– the Chairperson of the Board to review each Director’s
performance;
(A) the charter of the committee;
(B) the members of the committee; and
(C) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have a nomination committee,
disclose that fact and the processes it employs
to address board succession issues and to ensure
that the board has the appropriate balance of
skills, knowledge, experience, independence and
diversity to enable it to discharge its duties and
responsibilities effectively.
– a nominated Director to review the Chairperson’s
performance; and
– the Board to undertake a formal annual review of its
overall effectiveness.
Given the size, scale and nature of Eildon Capital, there
is not a separate nomination committee. The full Board
considers the issues that would otherwise be a function of
a separate nomination committee.
The Board reviews its performance in terms of Eildon
Capital’s objectives, results and achievements of the
Manager. The Board ensures each Director has the
necessary skills, experience and expertise, and the mix
remains appropriate for the Board to function effectively.
The Company’s policy is that the Board considers an
appropriate mix of skills, experience, expertise and
diversity (including gender diversity).
When evaluating, selecting and appointing Directors, the
Board considers:
As a result of these performance reviews, the Board may
implement changes to improve the effectiveness of the
Board and corporate governance structures.
– the candidate’s competencies, qualifications and
expertise, addition to diversity of the Board and his/her
fit with the current membership of the Board;
Independent professional advice may be sought as part of
this process.
– the candidate’s knowledge of the industry in which
Eildon Capital operates;
40
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
– directorships previously held by the candidate and
his/her current commitments to other boards and
companies;
– existing and previous relationships with Eildon Capital
and Directors;
– the candidate’s independence status, including the term
of office currently served by the director;
– criminal record and bankruptcy history (for new
candidates);
– the need for a majority or equal balance on the Board;
and
– requirements of the Corporations Act 2001, ASX Listing
Rules, the Company’s Constitution and Board Charter.
The Board seeks to ensure that:
– its membership represents an appropriate balance
between Directors with investment management
experience and Directors with an alternative
perspective; and
– the size of the Board is conducive to effective
discussion and efficient decision-making.
Under the terms of the Company’s Constitution:
– an election of Directors must be held at each Annual
General Meeting and at least one Director must retire
from office; and
– each Director must retire from office at the third Annual
General Meeting following his/her last election.
Where eligible, a Director may stand for re-election.
Recommendation 2.2 - A listed entity should have and
disclose a board skills matrix setting out the mix of skills
and diversity that the board currently has or is looking to
achieve in its membership.
BOARD OF DIRECTORS’ MATRIX
Directors
g
n
i
t
n
u
o
c
c
A
l
i
a
c
n
a
n
F
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Finance
Industry Knowledge
Skill, Experience and Expertise
t
i
d
u
A
&
e
e
t
t
i
m
m
o
C
t
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d
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r
e
p
x
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a
M
k
s
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a
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e
L
y
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e
t
a
r
t
S
e
c
n
e
i
r
e
p
x
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d
r
a
o
B
c
i
l
b
u
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y
c
i
l
o
P
c
i
l
b
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P
/
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r
o
t
a
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g
e
R
l
s
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t
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a
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a
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y
t
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p
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t
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g
a
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y
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e
p
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c
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o
t
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t
a
t
S
50%
50%
100%
100%
100%
50%
50%
100%
75%
100%
75%
Recommendation 2.3 - A listed entity should disclose:
(a) the names of the directors considered by the board
Both directors were appointed to the Board on 18 October
2016.
to be independent directors;
(b) if a director has an interest, position, association or
relationship of the type described in Box 2.3 but the
board is of the opinion that it does not compromise
the independence of the director, the nature of
the interest, position, association or relationship in
question and an explanation of why the board is of
that opinion; and
(c) the length of service of each director.
The Board currently comprises two Independent Directors:
– James Davies; and
– Michelle Harpur.
Directors must disclose any material personal or
family contract or relationship in accordance with
the Corporations Act 2001. Directors also adhere to
constraints on their participation and voting in relation to
matters in which they may have an interest in accordance
with the Corporations Act 2001 and Eildon Capital’s
policies.
Details of offices held by Directors with other
organisations are set out in the Directors’ Report. Full
details of related party dealings are set out in notes to
Eildon Capital’s accounts as required by law.
If a Director’s independent status changes, this will be
disclosed and explained to the market in a timely manner.
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2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only
CORPORATE GOVERNANCE STATEMENT
Recommendation 2.4 - A majority of the board of a listed
entity should be independent directors.
Recommendation 4.1 - The board of a listed entity should:
(a) have an audit committee which:
The composition of the Board is as follows:
– James Davies – Independent Director;
– Michelle Harpur – Independent Director;
– Alexander Beard – Non-Executive Director
– Mark Avery – Managing Director
The Board annually reviews the composition of the board.
Given the size, scale and nature of Eildon Capital, the
Board considers that the appointment of an additional
Independent Director at this time is not warranted, but
will be reviewed on an ongoing basis.
Recommendation 2.5 - The chair of the board of a
listed entity should be an independent director and, in
particular, should not be the same person as the CEO of
the entity.
The Chairperson of the Board is an Independent Director.
James Davies has been appointed as Chairperson of
Eildon Capital.
Recommendation 2.6 - A listed entity should have
a program for inducting new directors and provide
appropriate professional development opportunities
for directors to develop and maintain the skills and
knowledge needed to perform their role as directors
effectively.
The annual performance assessment provides an
opportunity for all directors to identify required training
although directors can request professional development
opportunities at any time.
PRINCIPLE 3 – ACT ETHICALLY AND RESPONSIBLY.
A listed entity should act ethically and responsibly.
Recommendation 3.1 - A listed entity should:
(a) have a code of conduct for its directors, senior
executives and employees; and
(b) disclose that code or a summary of it.
The Board has adopted a Directors’ Code of Conduct,
which is based upon the Australian Institute of Company
Directors’ Code of Conduct. It requires the Directors to
act honestly, in good faith, and in the best interests of the
Company as a whole, whilst in accordance with the letter
(and spirit) of the law.
PRINCIPLE 4 – SAFEGUARD INTEGRITY IN
CORPORATE REPORTING.
A listed entity should have formal and rigorous processes
that independently verify and safeguard the integrity of
its corporate reporting.
(i) has at least three members, all of whom are non-
executive directors and a majority of whom are
independent directors; and
(ii) is chaired by an independent director, who is not
the chair of the board, and disclose:
(A) the charter of the committee;
(B) the relevant qualifications and experience of
the members of the committee; and
(C) in relation to each reporting period, the
number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have an audit committee, disclose that
fact and the processes it employs that independently
verify and safeguard the integrity of its corporate
reporting, including the processes for the
appointment and removal of the external auditor and
the rotation of the audit engagement partner.
The Board has established an Audit and Risk Committee.
The Audit and Risk Committee has three members:
Michelle Harpur (Chairperson), James Davies and
Alexander Beard.
All members of the Audit and Risk Committee are Non-
Executive Directors. The majority of the Committee are
independent as is the Chairperson.
The Audit and Risk Committee operates under an
approved charter.
The Audit and Risk Committee has authority (within the
scope of its responsibilities) to seek any information it
requires from any employee of the Manager or external
party. Members may also meet with auditors (internal and/
or external) without the Manager present and consult
independent experts, where the Audit and Risk Committee
considers it necessary to carry out its duties.
All matters determined by the Audit and Risk Committee are
submitted to the full Board as recommendations for Board
decisions. Minutes of an Audit and Risk Committee meeting
are tabled at a subsequent Board meeting. Additional
requirements for specific reporting by the Audit and Risk
Committee to the Board are addressed in the Charter.
The purpose of the Audit and Risk Committee is to assist the
Board in fulfilling its responsibilities relating to the financial
reporting and accounting practices of Eildon Capital.
Its key responsibilities are to:
– review and recommend to the Board the financial
statements (including key financial and accounting
principles adopted by Eildon Capital);
42
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
– review and monitor risks and the implementation of
mitigation measures for those risks as appropriate;
Recommendation 5.1 - A listed entity should:
(a) have a written policy for complying with its
– assess and recommend to the Board the appointment
of external auditors and monitor the conduct of audits;
continuous disclosure obligations under the Listing
Rules; and
– monitor Eildon Capital’s compliance with its statutory
(b) disclose that policy or a summary of it.
obligations;
– review and monitor the adequacy of management
information and internal control systems; and
The Company has a Disclosure and Communications Policy.
The Board is committed to:
– ensure that any shareholder queries relating to such
– the promotion of investor confidence by ensuring
matters are dealt with expeditiously.
Attendance record at Audit and Risk Committee meetings
and the experience of the members is provided in the
Directors’ Report.
Recommendation 4.2 - The board of a listed entity
should, before it approves the entity’s financial
statements for a financial period, receive from its CEO
and CFO a declaration that, in their opinion, the financial
records of the entity have been properly maintained
and that the financial statements comply with the
appropriate accounting standards and give a true and
fair view of the financial position and performance of
the entity and that the opinion has been formed on the
basis of a sound system of risk management and internal
control which is operating effectively.
Eildon Capital does not have a CEO or CFO. Its investment
activities and day-to-day affairs are undertaken and
managed by the Manager.
Before the Board approves Eildon Capital’s financial
statements, it receives declarations of the CEO and the
CFO of the Manager that, in their opinion, the financial
records of Eildon Capital have been properly maintained
and that the financial statements comply with the
appropriate accounting standards and give a true and
fair view of the financial position and performance of the
company, and that their opinion has been formed on the
basis of a sound risk management system and internal
controls which are operating effectively.
Recommendation 4.3 - A listed entity that has an AGM
should ensure that its external auditor attends its AGM
and is available to answer questions from security
holders relevant to the audit.
The Auditor is required to attend Eildon Capital’s Annual
General Meeting and be available to answer shareholder
questions about the conduct of the audit and the
preparation and content of the Auditor’s Report.
PRINCIPLE 5 – MAKE TIMELY AND BALANCED
DISCLOSURE.
A listed entity should make timely and balanced
disclosure of all matters concerning it that a reasonable
person would expect to have a material effect on the
price or value of its securities.
that trading Eildon Capital’s shares takes place in an
efficient, competitive and informed market;
– complying with Eildon Capital’s disclosure obligations
under the ASX Listing Rules and the Corporations Act
2001; and
– ensuring the stakeholders have the opportunity to access
externally available information issued by Eildon Capital.
The Company Secretary is responsible for coordinating the
disclosure of information to Regulators and shareholders
and ensuring that any notifications/reports to the ASX are
promptly posted on the Company’s website.
PRINCIPLE 6 – RESPECT THE RIGHTS OF
SECURITY HOLDERS.
A listed entity should respect the rights of its security
holders by providing them with appropriate information
and facilities to allow them to exercise those rights
effectively.
Recommendation 6.1 - A listed entity should provide
information about itself and its governance to investors
via its website.
Information about Eildon Capital and its corporate
governance items are posted on its website at www.
eildonfunds.com
Recommendation 6.2 - A listed entity should design and
implement an investor relations program to facilitate
effective two-way communication with investors.
The Board has adopted a Disclosure and Communication
Policy that describes the Board’s policy for ensuring
shareholders and potential investors of Eildon Capital
receive or obtain access to information publicly released.
Eildon Capital’s primary portals are its website, Annual
Report, Annual General Meeting, Half-Yearly Report, and
notices to the ASX.
The Eildon Capital Secretary oversees and coordinates
the distribution of all information by Eildon Capital to the
ASX, shareholders, the media and the public.
All shareholders have the opportunity to attend the
Annual General Meeting and ask questions of the Board.
43
2018 Annual Report | EILDON CAPITAL LIMITEDFor personal use only CORPORATE GOVERNANCE STATEMENT
Recommendation 6.3 - A listed entity should disclose
the policies and processes it has in place to facilitate and
encourage participation at meetings of security holders.
Eildon Capital holds an Annual General Meeting (“AGM”)
of shareholders in November each year. The date, time
and venue of the AGM are notified to the ASX when
the notice of the AGM is circulated to shareholders and
lodged with the ASX each year.
The Board will choose a date, venue and time considered
convenient to the greatest number of its shareholders.
A notice of meeting will be accompanied by explanatory
notes on the items of business and together they will
seek to clearly and accurately explain the nature of the
business of the meeting.
Shareholders are encouraged to attend the meeting, or
if unable to attend, to vote on the motions proposed by
appointing a proxy. The proxy form included with the
Notice of Meeting will seek to explain clearly how the
proxy form is to be completed and submitted.
Recommendation 6.4 - A listed entity should give
security holders the option to receive communications
from, and send communications to, the entity and its
security registry electronically.
Eildon Capital provides its security holders with an
electronic communication option.
PRINCIPLE 7 – RECOGNISE AND MANAGE RISK.
A listed entity should establish a sound risk management
framework and periodically review the effectiveness of
that framework.
Recommendation 7.1 - The board of a listed entity should:
(a) have a committee or committees to oversee risk,
each of which:
The Board of Eildon Capital, through the Audit and Risk
Committee, is responsible for ensuring that:
– there are adequate policies for the oversight and
management of material business risks;
– there are effective systems in place to identify, assess,
monitor and manage the risks and to identify material
changes to the risk profile; and
– arrangements are adequate for monitoring compliance
with laws and regulations applicable to Eildon Capital.
Recommendation 7.2 - The board or a committee of the
board should:
(a) review the entity’s risk management framework at
least annually to satisfy itself that it continues to be
sound; and
(b) disclose, in relation to each reporting period,
whether such a review has taken place.
The Audit and Risk Committee reviews Eildon Capital’s
risk management framework at least annually.
Recommendation 7.3 - A listed entity should disclose:
(a) if it has an internal audit function, how the function
is structured and what role it performs; or
(b) if it does not have an internal audit function, that
fact and the processes it employs for evaluating and
continually improving the effectiveness of its risk
management and internal control processes.
Given the size, scale and nature of Eildon Capital, and has
no full time employees it does not have an internal audit
function. Eildon Capital has an audit and risk committee
which receives and reviews reports from the Manager
regarding material business risks as part of the Manager’s
management process.
(i) has at least three members, all of whom are
independent directors; and
PRINCIPLE 8 – REMUNERATE FAIRLY AND
RESPONSIBLY.
(ii) is chaired by an independent director, and
disclose:
(A) the charter of the committee;
(B) the members of the committee;
(C) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have a risk committee or committees
that satisfy (a) above, disclose that fact and the
processes it employs for overseeing the entity’s risk
management framework.
A listed entity should pay director remuneration
sufficient to attract and retain high quality directors and
design its executive remuneration to attract, retain and
motivate high quality senior executives to align their
interests with the creation of value for security holders.
Recommendation 8.1 - The board of a listed entity should:
(a) have a remuneration committee which:
(i) has at least three members, a majority of whom
are independent directors; and
(ii) is chaired by an independent director, and
disclose:
(A) the charter of the committee;
(B) the members of the committee; and
44
EILDON CAPITAL LIMITED | 2018 Annual ReportFor the year ended 30 June 2018For personal use only
(C) as at the end of each reporting period,
the number of times the committee met
throughout the period and the individual
attendances of the members at those
meetings; or
(b) if it does not have a remuneration committee,
disclose that fact and the processes it employs for
setting the level and composition of remuneration
for directors and senior executives and ensuring that
such remuneration is appropriate and not excessive.
Given the size, scale and nature of Eildon Capital, there
is not a separate remuneration committee. The full Board
considers the issues that would otherwise be a function of
a separate remuneration committee.
Remuneration for the Independent Directors is set at
market rates commensurate with the responsibilities
borne by the Independent Directors.
Independent professional advice may be sought. The
Managing Director and any Non-Executive Directors are
not remunerated by Eildon Capital.
Eildon Capital has no other full time employees to
consider the level and composition of remuneration.
Recommendation 8.2 - A listed entity should separately
disclose its policies and practices regarding the
remuneration of non-executive directors and the
remuneration of executive directors.
Remuneration for the Independent Directors is set at
market rates commensurate with the responsibilities
borne by the Independent Directors. Independent
professional advice may be sought. The Managing
Director and any Non-Executive Directors are not
remunerated by Eildon Capital.
Further information is provided in the Remuneration
Report set out in the Directors’ Report.
Recommendation 8.3 - A listed entity which has an
equity-based remuneration scheme should:
(a) have a policy on whether participants are permitted
to enter into transactions (whether through the
use of derivatives or otherwise) which limit the
economic risk of participating in the scheme; and
(b) disclose that policy or a summary of it.
Not applicable – Eildon Capital’s Directors do not receive
any equity-based remuneration.
45
2018 Annual Report | EILDON CAPITAL LIMITEDHEADING (SINGLE)For the year ended 30 June 2018For personal use only
ADDITIONAL INFORMATION
The following information was current as at 22 August 2018.
Distribution schedule
The distribution of shareholders and their shareholdings
was as follows:
Category
(size of holding)
Number of
ordinary shareholders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – over
Total
14
115
79
193
40
441
Minimum
parcel size
Number of
shareholders
Unmarketable parcels
Minimum $500.00 parcel
at $0.99 per share
505
8
Substantial holders
The names of the Company’s substantial holders and the
number of ordinary shares in which each has a relevant
interest as disclosed in substantial holder notices given to
the Company are as follows:
Shareholder
Number of ordinary shares
in which interest held
CVC Limited
J P Morgan Nominees Australia Limited
Chemical Trustee Limited
J K M Securities Pty Limited
17,823,789
3,984,384
3,069,377
3,000,000
20 largest shareholders – ordinary shares
As at 22 August 2018, the top 20 shareholders and their shareholdings were as follows:
Shareholder
Shares held
% of issued capital held
CVC Limited
JP Morgan Nominees Australia Limited
Chemical Trustee Limited
J K M Securities Pty Limited
Rubi Holdings Pty Limited
Fifty-Fifth Celebration Pty Ltd
Dr David John Ritchie & Dr Gillian Joan Ritchie
JPR Holdings Pty Limited
Ms Marnie Ross
Fordholm Consultants Pty Limited
Alexander Beard & Pascale Beard
Equitas Nominees Pty Limited
Equitas Nominees Pty Limited < PB-600865 A/C>
Mr Jamie Pherous
Delta Asset Management Pty Limited
AD & MP Beard Super Fund
New Avalon Pty Limited
Tyroc Pty Limited
Mr Elliott Kaplan & Mrs Brenda Kaplan
Syvest Pty Limited
17,823,789
4,084,384
3,069,377
3,000,000
1,300,000
1,184,770
640,168
500,000
500,000
435,000
414,285
297,753
242,856
225,000
220,000
200,000
180,905
160,417
160,036
160,000
38.71
8.87
6.67
6.52
2.82
2.57
1.39
1.09
1.09
0.94
0.90
0.65
0.53
0.49
0.48
0.43
0.39
0.35
0.35
0.35
34,798,740
75.59
Voting Rights
The Company’s constitution details the voting rights of members and states that every member, present in person or
by proxy, shall have one vote for every ordinary share registered in his or her name.
Registered Office
The Company is registered and domiciled in Australia. Its registered office and principal place of business are at
Level 25, 360 Collins Street, Melbourne VIC 3000.
46
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